Pensions & Insurance Supervision

About Pensions and Insurance Supervision

The Pension and Insurance Supervision (PISU) Department of Reserve Bank of Malawi was established
as an off-shoot of Supervision of Non-Bank Financial Institutions Department (SNBFI) on 1st July 2010.
The department was created to allow for more focused regulation and supervision of pension and insurance
sectors as the scope of supervision of the defunct department was considered to be too wide to achieve
the desired results.

The mission of the department is to foster the existence of a fair, safe, sound and stable pension and
insurance industry in Malawi in line with international supervisory standards. In pursuance of this mission,
the department performs its work with professionalism, integrity, impartiality, and in a friendly and cooperative
manner but without compromising its authority or mandate.

The Department has the following core strategic objectives:

ensuring the existence of an all inclusive and regulated pension and insurance sector;

developing the pension and insurance sector and enhancing stakeholder confidence in pension and insurance sector services in order to broaden and deepen the market;

safeguarding the interests of policyholders and pension fund members;

fostering a competitive, cost effective environment and a level playing field in the pension and insurance industry through provision of prudential directives and regulations; and

Providing quality, professional and effective supervisory and regulatory service.

Supervision of the Insurance Sector

The Insurance Act 2010 provides the primary legislative framework which governs the insurance
market in Malawi. The main purpose of supervising insurance entities is to ensure that they are
being operated in a sound and viable manner so as to develop and maintain public confidence in the
insurance sector. To this end the primary responsibility of the Registrar is to protect the
interests of the public by administering a regulatory and supervisory regime that promotes decency
and fairness in the operating environment by encouraging insurance companies to confine their risk
taking into acceptable levels.

It is, therefore, expected that the insurance industry will play a pivotal role in enhancing
access to financial services and products by majority of Malawians.

ONGOING SUPERVISION

The Department monitors financial performance of market players through continued off-site surveillance of all insurance market institutions using financial statements provided by the regulated institutions on a quarterly basis. The department conducts periodic onsite examinations mainly as a follow up on to the off-site findings. As required, findings of such onsite examinations are reported to the concerned institutions.

The Reserve Bank currently regulates and supervises the following market players which make up the insurance industry:

General Insurance CompaniesGeneral Insurance companies undertake liabilities under a contract of insurance to indemnify a person in respect of any loss or damage, including a liability to pay damages or compensation contingent upon happening of a specific event. To this end, general insurance companies issue non-life policies, otherwise known as property and casualty.

Life Insurance CompaniesLife Insurance companies undertake liabilities under a contract of insurance to indemnify a person in respect of any loss or damage, including a liability to pay damages or compensation contingent upon happening of a specific event. To this end, Life Insurance companies issue policies that cover liabilities contingent on the life of an individual.

Reinsurance CompaniesReinsurance companies on the other hand, undertake liabilities to pay money to insurers or reinsurers in respect of contractual liabilities or insurance business incurred by insurers or reinsurers arising out of events. In effect, reinsurers provide insurance services to insurance companies or indeed, other reinsurance companies.

Insurance BrokersInsurance brokers are entities that act as agents of the insuring public on insurance products, providing advisory or risk management services and may assist in soliciting, negotiating and procuring of contracts of insurance or reinsurance in exchange of a commission.

Insurance AgentsInsurance agents are persons or companies which sell insurance products on behalf of insurance companies in exchange for a commission. Insurance agents will be appointed by insurance companies to issue or collect proposals and policies, and collect insurance premiums to be passed on to insurers.

Insurance Loss Assessors/AdjustersInsurance loss assessors/adjusters are persons or entities that are engaged by insurers or policyholders to assess and establish the amount of loss/damage resulting from an event. This professional opinion may form the basis on how much should be paid in claims arising out of the event.

Supervision of the Insurance Sector

The Insurance Act 2010 provides the primary legislative framework which governs the insurance
market in Malawi. The main purpose of supervising insurance entities is to ensure that they are
being operated in a sound and viable manner so as to develop and maintain public confidence in the
insurance sector. To this end the primary responsibility of the Registrar is to protect the
interests of the public by administering a regulatory and supervisory regime that promotes decency
and fairness in the operating environment by encouraging insurance companies to confine their risk
taking into acceptable levels.

It is, therefore, expected that the insurance industry will play a pivotal role in enhancing
access to financial services and products by majority of Malawians.

ONGOING SUPERVISION

The Department monitors financial performance of market players through continued off-site surveillance of all insurance market institutions using financial statements provided by the regulated institutions on a quarterly basis. The department conducts periodic onsite examinations mainly as a follow up on to the off-site findings. As required, findings of such onsite examinations are reported to the concerned institutions.

The Reserve Bank currently regulates and supervises the following market players which make up the insurance industry:

General Insurance CompaniesGeneral Insurance companies undertake liabilities under a contract of insurance to indemnify a person in respect of any loss or damage, including a liability to pay damages or compensation contingent upon happening of a specific event. To this end, general insurance companies issue non-life policies, otherwise known as property and casualty.

Life Insurance CompaniesLife Insurance companies undertake liabilities under a contract of insurance to indemnify a person in respect of any loss or damage, including a liability to pay damages or compensation contingent upon happening of a specific event. To this end, Life Insurance companies issue policies that cover liabilities contingent on the life of an individual.

Reinsurance CompaniesReinsurance companies on the other hand, undertake liabilities to pay money to insurers or reinsurers in respect of contractual liabilities or insurance business incurred by insurers or reinsurers arising out of events. In effect, reinsurers provide insurance services to insurance companies or indeed, other reinsurance companies.

Insurance BrokersInsurance brokers are entities that act as agents of the insuring public on insurance products, providing advisory or risk management services and may assist in soliciting, negotiating and procuring of contracts of insurance or reinsurance in exchange of a commission.

Insurance AgentsInsurance agents are persons or companies which sell insurance products on behalf of insurance companies in exchange for a commission. Insurance agents will be appointed by insurance companies to issue or collect proposals and policies, and collect insurance premiums to be passed on to insurers.

Insurance Loss Assessors/AdjustersInsurance loss assessors/adjusters are persons or entities that are engaged by insurers or policyholders to assess and establish the amount of loss/damage resulting from an event. This professional opinion may form the basis on how much should be paid in claims arising out of the event.

List of Licensed Insurance Entities

Supervision of Pensions

The Pension Act provides the primary legislative framework for regulation and supervision of the pension industry in Malawi. The main purpose of regulating and supervising the pension industry is to ensure that trustees and service providers act in the best interest of pension members, and that pension funds are operated in a safe, sound and viable manner in order to achieve the objective of providing retirement savings. Ultimately, this will help to develop and maintain public confidence in the mandatory pension scheme as well as providing social and financial security in retirement. At the aggregate level, the accumulation of savings through pension funds contributes significantly towards capital formation critical to creation of investments. If properly channeled the investments may positively contribute to economic growth.